tv Nightly Business Report PBS December 21, 2012 6:30pm-7:00pm PST
captioning sponsored by wpbt >> this is n.b.r. >> susie: good evening, everyone. i'm susie gharib. tom is off tonight. president obama tells republicans and democrats they have ten days to work out a fiscal cliff deal. and he says it's doable. tonight's market monitor guest is not scared off by cliff worries. he's buying stocks, saying the markets will do well in the new year. he's richard steinberg of steinberg global asset management. and warren buffett, the oracle of omaha has plenty to say on taxes and the fiscal cliff: we talk with his long-time friend and "fortune" magazine journalist carol loomis. that and more tonight on "n.b.r." some straight talk from president obama tonight about the fiscal cliff.
speaking to reporters from the white house he said he's ready and willing to get a comprehensive package done, but it's up to republicans and democrats to make it happen. >> nobody gets 100% of what they want. everybody has to give a little. >> susie: the president also proposed a smaller package that prevents taxes for 98% of americans from going up and for unemployment insurance to be extended. he pressed lawmakers to agree on this in the next ten days. darren gersh has details. >> reporter: one day after the collapse of efforts to avoid the fiscal cliff, all sides were speaker boehner tried to shift that burden, saying democrats
unemployment insurance to be extended. >> we can't cut our way to prosperity we need real economic growth. and many of us believe on both sides of the aisle that fundamental reform of our tax code will help us get our economy moving faster and put more americans back to work and more americans on the tax rolls. how we get there, god only knows. >> reporter: voters who expected congress to watch over the >> so i think the tax issue and the job issue needs to be looked
>> reporter: voters who expected congress to watch over the economy after the election are watching the fiscal cliff with growing alarm. >> it's going to mean a lot of problems, the job situation will actually get worse because then companies can't borrow money and if you can't borrow money, then you're gonna have problems with hiring employees and stuff like that. >> reporter: the holidays are usually times that bring families together and many would like to see that happen at the national level as well. >> so i think the tax issue and the job issue needs to be looked at together and it shouldn't be divided among rich or middle class, or lower class it shouldn't be any class, it should be america coming together and right now in our house that's a big cause of debate. >> reporter: but washington isn't a source of optimism these days. >> if they make a deal it certainly won't be a good one, they'll say this is something we've got to get done and i don't think it's going to be using any brain power to do it. >> reporter: already there is growing talk in washington of a so-called mini-deal.
>> let's hope they do. the president was serious. he was friendly in the statement he made-- >> he's going on vacation. he's going to hawaii. >> susan: yeah, but there's an urgency here, and do you think we are going to be any closer to getting a deal done? >> the president really scaled back his ambitions for the immediate time. he said, look, guys, nancy pelosi, come back, try to do the minimum, try to do the least amount of harm. and then come up with some way to say that we'll address bigger issues in the new year. >> he proposed tonight a smaller package, a smaller deal. what will this mean for the economy? what will it mean for the deficit if this small deal, mini deal is passed? >> well, that could be a big problem because basically he's left out a lot of critical
issues. the sequester. we didn't hear him talk about that so we don't know how they'll deal with the automatic spending cuts and defense. and he didn't talk about the physician payment issue. physician under medicare are expected to get a 30% cut at the beginning of year. we don't know how that will work out. >> and he didn't say anything about the debt limit and this is one of the things he wanted in this fiscal cliff deal. by leaving that out, are we in for another big fight next year? >> it certainly looks like it. it seems to be-- and i've heard this from many people-- that republicans think that the debt limit is their best leverage to get deep spending cuts. they didn't want to give it up in these negotiations. it certainly-- it looks like it's too radioactive to deal with in the next 10 days. so beginning in january and february, we're going to have a fight over the debt limit. and we're going to have a fight over spending, and it looks like we're going to have fight over the debt limit for the next couple years.
>> one of the things the president said is there are real-world consequences-- his words-- in the whole debate. from the people you talk, to average americans, it seems like they get it. do you think congress gets it? >> i think they get it, but in many ways-- many of them get it, but it's hard to talk for all of them, but many of them also get the real-world political issues. they see taxes as a fundamental bedrock issue of what it means to be a republican. and if they give that up, they raise taxes, they lose a fundamental part of their identity as a party, then they weigh that against the economic damages that we hear about if we have a messy fight over the debt limit. those are the tradeoffs that leaders are making and where they come down depends on what they hear from their constituents. >> well, to be continued the day after christmas. we'll see what happens. thanks a lot, attorney. have a good weekend, washington bureau chief darren still ahead, our friday market monitor guest is looking beyond
the fiscal cliff and he sees stocks moving higher in the new year. he's richard steinberg of steinberg global. >> susie: fiscal cliff fears, scared off investors today. stocks fell sharply, as those cliff negotiations broke down. all the major averages were down by about 1%. by the close, the dow tumbled 121 points, the nasdaq lost almost 30, and the s&p 500 was down 14 points. with just five trading days left this year, investors are beginning to look beyond washington politics. suzanne pratt reports. >> reporter: yes, there will be life for the u.s. stock market after the fiscal cliff. it may not seem so today, as stock investors ran for the exits even faster than washington lawmakers left town for the holidays. but, somehow, someway, sometime there will be a deal between congress and white house. and, once that happens equity investors will need to refocus. >> once we get into the new year, i think we're going to get right back into earnings season
again. and, once again earnings season is what happened last quarter and what do we think is going to happen in the quarters moving forward. >> reporter: as far as what happened in the quarter that ends for most companies on new year's eve, the answer isn't good. according to standard and poor's, wall street analysts predict big u.s. firms only saw a 3% increase in profits in the fourth quarter. on october 1, they were far more optimistic, forecasting a close to 10% gain. so what happened to all that earnings optimism earnings? it turns out it evaporated, as the u.s. economy started to show signs of weakness in the last few months. >> the trend of aggregate earnings has been flat or even a little bit down. so, if that doesn't improve then stocks can't really go anywhere. they can stay where they are, i don't see them going down a lot, but they're not going to be able to go up a lot. >> reporter: there will also be careful scrutiny of economy data, particularly the monthly jobs report.
traders are wondering if recent strength in the labor market will carry into the new year. and, then there's europe. major headlines on the region's debt crisis have been noticeably few. and that has traders spooked. still, some market pros are upbeat about the outlook for stocks next year. >> our year-end target for 2013 is 1,525 to 1,575, that's our range for the s&p 500. if you look at it from current levels, you tack on a couple of percent for dividends, so it will be another good year. >> reporter: a good year for stocks next year perhaps. but, 2012 isn't over yet. and, there are fresh worries there may be more selling in the next few days, as investors look to lock in at least some of this year's profits. suzanne pratt, "n.b.r.," new york.
>> susie: 'tis the season for procrastination, but don't worry, there are still three full shopping days left until christmas. and what better time to get started than tomorrow. it's expected to be the busiest shopping day of the year and the best prices so far. during the last weekend before christmas, retailers are marking down merchandise by as much as 70% and they'll be pulling out all the stops to lure customers into stores and malls around the country. this final count-down is especially important to retailers: as much as 40% of holiday sales take place in the last ten days before santa makes his run. >> get out there right now. the sales are up! saturday, macy's is having their largest sales day of the year, as well as kohls. all those promotions are up right now.
what we are seeing in the malls today and tomorrow all the way through christmas will be the most aggressive promotions of the year. >> susie: we didn't see much buying enthusiasm today. investors were discouraged on the stalemate in the fiscal cliff talks. the market dropped at the open and the selling continued into the close. the s&p 500 traded in a 20 point range. for the week, the dow posted the smallest gains, up just a half of a percent. the nasdaq advanced a little less than 2% and the s&p rose 1%. big trading volume despite many traders already on vacation, it's quadruple witching day, that's when many futures and options contracts expire. nearly two billion shares traded here on the big board. composite volume was more than twice as large. and almost three billion shares traded on the nasdaq. all ten of the s&p sectors moved lower on the selloff, energy fell by more than 1% and so did financials and telecom services that sector was weighed down by big losses in blackberry maker research in motion. more on that in a moment.
today's selling came despite some encouraging economic reports. durable goods orders rose 0.7% in november, a slight decline had been expected. personal spending also picked up in november, rising 0.4% of a percent as consumers shrugged off worries about the fiscal cliff and went shopping. as investors sold stocks, they bought up safe-havens like treasuries and gold. that pushed down the yield on the ten-year treasury to 1.77% yields move in the opposite direction of treasury prices. meanwhile, gold was shining up over $14 to $1,660 an ounce. there were some deals getting done today. first up, general electric. it's buying the aeronautics unit of italian engine maker avio. the price tag: $4 billion. g.e. shares fell slightly on the deal, down 17-cents to $20.88. also today, a deal in the casino space: pinnacle entertainment is
buying ameri-star casinos for $869 million in cash that works out to about $26.50 a share. shares of pinnacle and ameristar were each up over 20%. the day's big loser: research in motion. rimm shares tumbled nearly 23% to under $11. investors initially cheered its latest results out last night, but the selling kicked in today, after rimm's c.e.o. said the company's service-revenue model will change significantly next year. the service fees r.i.m. charges customers to use its network bring in over a third of the company's revenues. also caught in the selling today were shares of nokia. nokia and reasearch in motion announced they had settled one of their patent disputes. as part of the deal, rim agreed to make a one-time payment and continue to pay licensing fees. shares of nokia were down 4.5% to close just under $4 a share. facebook's instagram photo- service is doing an about-face: it's scrapping changes to its
terms of service agreement that would have allowed it to sell photos posted by users. public backlash over those changes hit facebook shares: they fell 4% to $26.26. you'll remember it went public in june at $38 a share. and, t.j.x., parent of marshall's and t.j. maxx is going online. it's buying off-price online retailer sierra trading post for $200 million in cash. t.j.x. says the deal adds immediate scale to its plans to expand online. still, its shares fell nearly 1% putting it below $42 a share. of the five most actively traded exchange traded products, the emerging markets and financials spiders were hardest hit. each fell more than 1%. and that's tonight's market focus.
>> susie: our market monitor guest expects stocks will go higher in the new year, as much as 10%. he's richard steinberg, president of steinberg global asset management. rich, great to see you. >> great to see you, susie. >> susie: before away get into your outlook i want to ask you you what president obama said about the fiscal cliff. how do you think that will play out in the markets on monday? it is a short trading day but how do you think the investors will receive the comment? >> it received them well today. i think towards the end of the day with only a 1% sell-off in the market after a really tough overnight news from republicanes, i think he's going to putw together a little mini deal that at least investors will know that we can
kick the can down the road to the first of the year, and then fight the bigger battle in january. >> susie: this doesn't change your forecast? you're calling for 10% growth on the major averages. can we really do that with all this fiscal cliff stuff hanging over us? yes, i think once we get passed washington-- i have my no shave december beard going like i did last year guys have noticed. >> that's to insurance we have a good economy and good market. we're below the street of 110 and a 15 multiple, we could see 1550 on the s & p. it could be bumpy, base on the political risk in wher washington, but we feel pretty good the economy is turning and if we get a pickup in housing and wages and employment, we think it's a doable number next year. >> susie: all right. you have five stocks that you're recommending for investors. let's see if we can whip through all of them.
let's start with direct tv. that's at the top of your list. why do you like directtv? /çuy> wells fargo is a great brand name. we think both housing and the consumer spending cycle will get better into next year. stock trades at nine times earnings. and, again, next year we think there will be a shift from growth to value. so we are in more of the warren buffet tall names. >> susie: you're also recommending berkshire hathaway, the baby b shares, up 18% this
year. they've been stuck around the $90 level over the last couple of months. so what gives here. >> we have a $123 attacker 12-18 months out. stock trades at two times book. they just bought back stock from the state. again, it goes back to a housing and consumer spending cycle. we think the portfolio dowsms well and if the equity markets do well, we'll get a kicker to the book value there as well guys have aig is your next one. it was in the news. the governor patric gft is selling its sharre finally in a.i.g. the stock is around 35. is there any upside for investors? >> we think the stock is trading at 50% of book. the government, awns, sold their position. ben mochet came in from metlife, and he's reall?á changing the culture there. we think there's a great upside to the it.
>> susie: royal dutch shell, tell us why you like this. i know it has a big, fat dividend, and you do like dividend stocks. dividend, and you do likdividene to? >> it's a dividend play, and the energy sector did poorly last year. we were wrong on the energy sector because the economy has been limping along. it's the cheapest name in the global energy names and we think the stock really deserves attention going into next year with a big dividend and an $80 target. >> susie: all right, you arey bullish, but i have to ask you what worries you? is there any wild card out there that gives you concern? >> well, i wake up at 4:00 a.m. with a laundry list. we have the-- i wasn't going to say "fiscal cliff" because i have to pate dollar in our jar at the office-- the fiscal cliff issue. mideast, we don't know what's going to happen with the iranian card. north korea feels like they don't have a lot of attention paid to them, so every once in a while they do something crazy to get back in the news. certainly europe is still a wild
card. and i think we just have to be aware of the fact that the markets react to the unexpect, not the expected. so we have to be looking at some of this risk. we hedged our portfolio a little bit, in my portfolio i run at the firm. if the market goes we'll make lesand if it pulls back we'll take the risk off. >> susie: any disclosurees, rich? do you own any of them? >> we own all of them at the firm, and i own them personally because the managers tend to eat their own cooking. >> susie: thank you so much, rich. have a nice holiday. rich steinberg of globe.